Pensioner poverty looms as active membership of occupational pension schemes declines

The pension provider reports although the state pension is worth just 31% of the nation's average earnings, - less than half that of the Italians who retire with a state pension worth 68% of average earnings - 64% of UK residents intend to rely on their state pension in retirement as more and more workers move away from occupational pension schemes.

The number of active members in occupational schemes shows an alarming decline with 10.7 million active members in 1991 slipping to just 8.8 million in 2007.

At this time two-thirds of the current working population were not engaged in any form of occupational pension schemes.

The Pensions Policy Institute estimates that the introduction of auto-enrolment into workplace pensions in 2012 and the continued shift by employers from defined-benefit (DB) to defined-contribution (DC) pensions in the private sector mean that by 2020 there could be an additional 10 million savers in DC pensions. However, AXA's research shows that just 19% of people are likely to take part in the automatically-enrolled scheme.

In light of the continued decline in occupational pension membership, AXA estimates that, by 2020, there could be a rise of just 800,000 members in occupational pension schemes, far from the 10 million private member estimations.

Steve Folkard, head of savings and pensions policy at AXA, said: "The erosion of the once sound company pensions infrastructure in the UK presents a future Government with a massive challenge. Pensioner poverty is set to grow dramatically over the coming years and current reform measures will take years to implement.

"At AXA we have two major concerns: first, around the continuation of means-tested benefits, and how the lack of clarity about what a person might receive impacts negatively on people's willingness to save, and second, that automatic enrolment for existing schemes needs to be brought forward to increase take up among good existing schemes. This is all the more important now that Personal Accounts will not impact many employers until 2016."